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Interview: Avelo Airlines CEO Andrew Levy On the U.S.’s Newest Airline
On Thursday morning, Avelo Airlines — a new low-cost U.S. airline based in Houston — announced it had begun selling tickets for its first flights: 11 routes to as many cities in the Western U.S. operating from Hollywood Burbank Airport just north of Los Angeles.
The airline is headed by Andrew Levy, a multi-decade veteran of the industry who has worked at big-name airlines like United Airlines and Allegiant Air and still serves on the board of directors of Panamanian flag carrier Copa Airlines. Levy sat down with AirlineGeeks on the day of the announcement to discuss Avelo and the path to success it hopes to chart.
In his first foray into building an airline from the ground up, Levy is looking to capitalize on a U.S. airline industry that has seen consolidation trim back competition leave power concentrated in the hands of a handful of carriers.
“I think it’s been a really good time to launch a new airline in the United States for several years now, I was starting to work on this back in 2015 and I ultimately put it on ice when I decided to go work with United. But I felt that there was a need for more seats in the market for quite some time. It’s a huge country, there’s very few players. There’s a lot of seats out there, but there’s very few carriers due to all the consolidation that’s occurred in the last 15-plus years. And I think there’s a lot of opportunities out there that have been created as consolidation has occurred and networks have evolved to become more streamlined for the remaining carriers.”
Levy said Avelo’s timeline is around six months behind where its leadership had originally planned, much of that a result of the COVID-19 pandemic.
“The first thing is that we were fortunate that we closed our investment and got DOT approval right before the pandemic began, so that was just fortunate timing. We had plenty of capital, and also we had not made a lot large commitments that we were about to make because we were moving quickly to get started.”
After that, he said, weathering the storm “became a matter of just being patient.” But in November, the airline’s board of directors decided it was time to push ahead with the carrier’s original plan, four months of preparation that brought them to the announcement on April 8.
A New Network Focus
Hollywood Burbank Airport is located around 20 miles north — at least an hour-long drive, and likely more, in typical morning or afternoon traffic — of the much busier Los Angeles International Airport. According to Levy, Avelo’s calculations suggest that for around 6 million Los Angeles metro area residents, Burbank is the more convenient airport. And it’s for that reason the airline believes it can serve as a proof of concept for one of Avelo’s main points of market penetration: secondary airports.
“Certainly focusing on secondary airports in big metro areas is an opportunity we think is ripe and that we expect to pursue,” Levy said. “Burbank, to me, might be the best airport in the country. It’s certainly the best secondary airport in the country. It’s a great place to start. There are quite a few large metro areas in the United States that have viable secondary airports. Not every big metro area has them, but many of them do. And that’s interesting to us because, in most cases, either these are airports that are underutilized or they’re just unutilized.”
That sentiment for Burbank was the same one expressed in Avelo’s original route announcement, which stressed the value it will offer travelers over flying into the more typical Los Angeles International Airport.
Standing Out in the Crowd
In many respects, Avelo’s business model is following in the footsteps of other low-cost carriers in the U.S. With $19 fares to celebrate its entry into service and an unbundled fare model that allows passengers to pay only for what they need, the model seems to mimic that of a Frontier or Spirit. But crucially, where U.S. ultra-low-cost carriers — and to a degree, even larger U.S. legacy airlines — have often lost out on getting passengers is in having the reputation that they only care about earning incremental revenue.
Avelo, however, is looking to take a page from the book of Southwest Airlines, an airline that despite its low-cost-carrier-like business model, at least somewhat because of its reputation for taking care of its passengers as well as any other, has largely escaped the ire of low-cost carrier critics.
“We really are putting a huge emphasis on people,” Levy said. “One of the nice things about starting from scratch is you can build the organization from scratch, and you can be, in our case, extremely thoughtful and very rigorous about how you approach that. We’re really trying to be selective about ensuring that everybody who joins us is like-minded in terms of our values and what resonates with us.”
He said that begins with the kind of people the airline is hiring to work on the front lines in its airports and on its aircraft
“Certainly those who are going to be interacting with our customers, we want to ensure that they are by their nature people who enjoy being around people, enjoy serving people, enjoy caring for people,” Levy said. “Those are things you can’t really train people to do. You have to take people who are naturally like that and then you train them. So I hope that becomes a point of distinction for us. We’re not trying to be Southwest. We’re trying to be Avelo. But we’re extremely focused on that, and I hope that people notice it when they fly us.”
Avelo’s next big milestone will come April 28, when the airline operates its first passenger flight. By May, it aims to have all 11 of its announced routes operating. And by the end of the second quarter, the airline will take delivery of a trio of new aircraft and begin to deploy them on other routes.
“I think a year from now, I think we will be profitable. I think we will have quite a few more than six airplanes, and I think that we will be really excited about expanding probably into a new base going into next summer,” Levy said. “I’m incredibly bullish about the opportunity, I was bullish before the pandemic, and I’m extremely bullish now. I think we just have a wonderful opportunity. We have great people, plenty of capital, there’s great opportunity in the market, we’ve got a lot of experienced leaders, and I think we have all the ingredients to build a hugely successful business, and we’re very optimistic about the future for Avelo.”
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